Reverse Privatization as a Reaction to the Competitive Environment: Evidence from Solid Waste Collection in Germany

39 Pages Posted: 25 Apr 2018

See all articles by Juri Demuth

Juri Demuth

E.CA Economics

Hans Wolfgang Friederiszick

E.CA Economics; ESMT European School of Management and Technology

Steffen Reinhold

E.CA Economics

Date Written: April 23, 2018

Abstract

After earlier waves of privatization, local governments have increasingly taken back control of local service provisions in some sectors and countries and, instead, started providing those services themselves (reverse privatization). Using a unique panel data set on the mode of service provision for solid waste collection for German municipalities covering the years 2003, 2009, and 2015, we investigate motives for reverse privatization. Our results show that, in deciding whether to insource or not, municipalities react to the cost advantages of private suppliers as well as to the competitive environment, with more switching to insourcing in concentrated markets. Furthermore, we find local contagion effects, that is, insourcing is more likely if municipalities close by also provide services themselves, whether in horizontally or vertically-related markets. Implications for competition law enforcement are discussed.

Keywords: Local privatization, state-owned enterprises, competition law enforcement, mergers, logit regression

JEL Classification: L33, L44, L88, H44, K21

Suggested Citation

Demuth, Juri and Friederiszick, Hans Wolfgang and Reinhold, Steffen, Reverse Privatization as a Reaction to the Competitive Environment: Evidence from Solid Waste Collection in Germany (April 23, 2018). ESMT Working Paper No. 18-02. Available at SSRN: https://ssrn.com/abstract=3168551 or http://dx.doi.org/10.2139/ssrn.3168551

Juri Demuth

E.CA Economics ( email )

Schlossplatz 1
Berlin, 10178
Germany

ESMT European School of Management and Technology ( email )

Schlossplatz 1
Berlin, 10178
Germany

HOME PAGE: http://www.esmt.org/hans-w-friederiszick

Steffen Reinhold

E.CA Economics ( email )

Schlossplatz 1
Berlin, 10178
Germany

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